Growls

One of the myths perpetuated by liberals is that tax cuts go to the rich while spending cuts go to the poor. That’s not what the facts are, however, at least according to this fact sheet published last week by the Tax Foundation. Using IRS data, the Tax Foundation estimates that 43.4 million (32 percent) returns, representing 91 million individuals, will “pay zero federal income tax after taking advantage of deductions and credits . . . Adding to this figure the 15 million households and individuals who file no tax returns at all, roughly 121 million Americans – or 41 percent of the U.S. population – will be completely outside the federal tax system in 2006”. Table 1 in the analysis shows the percent of returns with zero tax liability was 28% in 1950, dropped to 16% by the late 1960s, peaked at 26% in the late 1970s, dropped to 18% in the mid-1980s, but has since steadily risen to its current level of 32%. In Virginia, there were 945,257 returns, or 27%, that had a zero or negative tax liability.

The concern, according to the Tax Foundation, is that reform of the federal tax system “requires that the base of the federal income tax be widened so that overall tax rates can be reduced . . . (and) any attempt to broaden the tax base will be a difficult sell for lawmakers.” In his latest column, Thomas Sowell asks whether facts are obsolete. We hope this post helps dispel the myth that low-income people are shouldering the burden of the tax cuts received by the rich.